Search results for "Credit risk"
showing 10 items of 59 documents
Credit Risk Versus Performance in the Romanian Banking System
2017
Abstract The Romanian banking sector, predominantly governed by the capital of foreign banks, is, as well as other international banking sectors, under the sign of the necessary balance that should exist between risk and performance. This is a result of banks trying to take risks that they can control, given that they need to generate financial results that are satisfactory for all categories of bank creditors, namely shareholders, depositors and other lenders. In this paper, I wanted to analyze the risk situation assumed by the main banks in the system versus the performance gained in recent years. This article is part of a wider research, so I will refer only to the main risk assumed by a…
CLUSTER IMPACT ON COMPANY CREDITWORTHINESS: CASE OF LATVIA
2013
One of the leading driving forces of every state economy is small and medium enterprises (SME). In Latvia, SME accounts for 99.7% of the national industrial system, creating 70% of the national’ value added. The lack of sufficient capital and credit is often a major problem for the development of SME, particularly in their early growth stages. The main criterion and quality indicator of credit risk assessment is the borrower’s creditworthiness. Before issuing a loan, the checking of the borrower’s credibility and solvency is carried out. The assessment of the borrowers’ ability to pay, their creditworthiness at a definite moment must be connected with the ability to meet their liabilities i…
Corporate Distress and Restructuring with Macroeconomic Fluctuations: The Cases of GM and Ford
2011
Traditional methods for evaluating corporate credit risk rarely consider the impact of the macro economy on corporate value and performance. We argue that lenders and management can obtain valuable information about the need for and approach to restructuring by decomposing default predictions into intrinsic and macroeconomic factors. We apply a method previously used for measuring macroeconomic exposures on default predictions in order to filter out macroeconomic factors. In this paper the method is applied on an analysis of the Z-scores for GM and Ford for the period 1996-2005. The macro-economy has affected the two firms in different ways with implications for managements and creditors ap…
Risk Taking by Banks in the Transition Countries
2007
The banking sectors of the transition countries have progressed remarkably in the last 15 years. In fact, banking in most transition countries has largely shaken off the traumas of the transition era. At the start of the 21st century banks in these countries look very much like banks elsewhere. That is, they are by no means problem free but they are struggling with the same issues as banks in other emerging market countries. There have been a surprisingly large number of studies that have told us about the performance of these banks but we know very little about their risk taking behaviour and how the banking environment influences it.
Credit Risk Disclosure Practices in the Annual Financial Reporting of Large Italian Banks
2019
Risk disclosure in banking is particularly important for the efficacy of market discipline, the assessment of bank performance, the efficiency of the financial market, and the overall stability of the financial system. The European banking union and the financial crisis have enhanced the strategic role of credit risk disclosure in banking. The topic of this chapter is the evaluation of credit risk disclosure practices in banks’ annual financial reporting. The empirical research is conducted on a sample of ten large Italian banks. The authors employ content analysis and provide a hybrid scoring model for the assessment of credit risk disclosure. The chapter provides empirical findings which …
CREDIT RISK MANAGEMENT IN COMMERCIAL BANKS
2016
The article proposes a model of credit risk assessment on the basis of factor analysis of retail clients / borrowers in order to ensure predictive control of the level of risk posed by potential clients in commercial banks engaged in consumer lending. The aim of the study is to determine the level of risk represented by different groups (classes) of retail clients (borrowers) in order to reduce and prevent credit risk in the future as well as to improve the management of banking risks. The main results of the study are the creation of a model of borrowers internal credit ratings and the development of the methods of improving credit risk management in commercial banks.
‘Too interconnected to fail’ financial network of US CDS market: Topological fragility and systemic risk
2012
A small segment of credit default swaps (CDS) on residential mortgage backed securities (RMBS) stand implicated in the 2007 financial crisis. The dominance of a few big players in the chains of insurance and reinsurance for CDS credit risk mitigation for banks' assets has led to the idea of too interconnected to fail (TITF) resulting, as in the case of AIG, of a tax payer bailout. We provide an empirical reconstruction of the US CDS network based on the FDIC Call Reports for off balance sheet bank data for the 4th quarter in 2007 and 2008. The propagation of financial contagion in networks with dense clustering which reflects high concentration or localization of exposures between few parti…
Bank Lending in Project Finance: The New Regulatory Capital Framework
2012
The paper aims to examine the new regulatory framework of project finance in the economics of banking firms. In particular, the paper investigates the uniqueness of the project finance, the significant importance of the project finance in bank activity, and the role of the new bank capital requirements to promote the innovative financial scheme. In the project finance business loans terms and characteristics are primarily based on the assets and quality of the project to be financed. It means that the usual bank rating models for lending business might not been implemented in the project finance lending. Quantitative estimates of credit risk could not be always possible in project finance l…
Bank Stability: The Case of Nordic and Non-Nordic Banks in Latvia
2018
The banking industry is facing huge challenges due to technology-enabled innovation, to changes in customer preferences, to bank de-risking and to new regulatory initiatives. To go through all these changes, banks need to be stable. The present study contributes to the empirical literature by identifying the determinants of stability of banks in the Latvian Banking Industry. This study covers both bank-specific (endogenous) factors and macroeconomic (exogenous) factors that impact the stability of banks. The data set used in this study is the annual financial statements of Latvian banks operated in the period 2003-2016. Using multivariate regression analysis techniques, we found evidence th…
Kredītēšana Latvijā: Attīstība un problēmas
2016
Galvenais kreditēšanas uzdevums ir veicināt labvēlīgus makroekonomiskos apstākļus tautsaimniecības ilgtermiņa attīstībai. Kreditēšanai ir nepieciešama cieša uzraudzība, lai tās darbība būtu vērsta uz attīstību. Sava darba sākumā autore sniedz informāciju par pareizu kreditēšanas pārvaldību, ar to saistītajiem riskiem un kontroles pasākumiem. Lai atspoguļotu kreditēšanas attīstības posmus, tiek veikta komercbanku un ne-banku kredītportfeļa un ar to saistīto risku analīze. Tiek atklātas kreditēšanas problēmas no aizņēmēju un aizdevēju puses, piedāvāti iespējamie pasākumi to novēršanai. Darbā tiek noskaidrotas pastāvošās problēmas Latvijas kreditēšanas situācijā, tiek piedāvāti iespējamie vari…